It is a sign of the times that I spent some time thinking about whether the title of my post would offend some people, as sexist or worse. I briefly considering expanding the title to "Sugar Daddies and Molasses Mommies", but that just sounds awkward, or even replacing the words with something gender neutral, like "Glucose Guardians", but very quickly passed on the idea, deciding to stay with my initial title. After all, I am too old to care about what other people think, and the type of person who would be offended by the title, is probably not someone that I want reading this post in the first place.
That was the thought that came to mind, as I was writing about the US government's plans to break up big tech, and chronicling how much the big tech companies have struggled, trying to enter new businesses, notwithstanding the capital and brainpower that they have at their disposal. In keeping with my inability to stay focused, that then led me to also think about sovereign wealth funds, an increasingly powerful presence in both private and public equity markets, and then about green energy, a favored destination for impact investors over the last two decades.
They all have had almost unimpeded access to capital, from parent companies with CVC , the government with SWF and impact investors for green investing , and seem to, at least collectively, punch well below their weight, given their size.
Corporate venture capital CVC refers to capital invested by established firms, into young companies and start-ups, sometimes in the same business and sometimes in others. The motivations for the practice vary, and the payoff from CVC is debatable, but it is undeniable that CVC is growing as a segment of venture capital, and that it is not only affecting the pricing of the young companies that are targeted, but also altering the economics of venture capital, in the aggregate.
To understand why companies turn to investing like venture capitalists, I will bring in my life cycle perspective, with cash available, investment choices and growth potential at each phase:. For most young companies, where the free cash flows from existing businesses are negative, because of shaky profitability and large reinvestment needs, investments are likely to be focused on existing businesses, and venture capital will not be on the menu.
